“Of course, it will have an effect on us, but the clear rule for a referendum…is whether we are transferring power from Britain to Brussels.”
I do not agree that that is the basis for a referendum. It would be under the European Union Act 2011, but where a European decision, treaty or other legal instrument —in this case, there will be a mixture of those—applied on the face of it only to the eurozone, there would, under section 4, be no referendum.
That is why I have introduced a Bill saying we should have a referendum, and that Bill is supported by no less than six Select Committee Chairs, plus some distinguished Members, such as my right hon. Friend the Member for Wokingham (Mr Redwood), and members of the new intake who have taken a great interest in these matters. As I have said, the Bill has been presented, and the good news is that there will be a ten-minute rule Bill debate in October—the Leader of the House is here, and he knows that already. The Bill is intended to advance the case for a referendum on fiscal union.
In the Liaison Committee, the Prime Minister seemed pretty confident that there would not be a treaty. When I said that
“you are implying that there might not be a treaty” ,
he said—this was on 6 September—
“There is an important point on the issue of the treaty…Let us be clear: no one in Europe at the moment is currently talking about a new major treaty to put in place deeper fiscal union or changes in the eurozone. That may well happen in future…and if it were to happen, there would be consequences for Britain. Britain should think carefully about how to maximise our national interest”.
My answer to that is, first, that we now know that there will be a treaty, because the Chancellor of the Exchequer announced it from Marseilles. Secondly, I do not see how Britain can maximise its national interests when the new treaty, by its very nature, will erode the heart of those vital national interests.
There will be consequences for Britain, which raises another issue. We know there will be a treaty. As Mr Barroso said this morning—the Prime Minister has said this, too—it will be dealt with through a mixed bag of measures. Part of the process will no doubt be dealt with through enhanced co-operation, although the legality of that is very questionable indeed, and the European Scrutiny Committee will certainly look at that. Part of the process may also be dealt with through European Council decisions and intergovernmentalism, if those
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involved can get away with it. However, the bottom line is that the policy and the judgment are wrong, and we should not promote them. The best thing that I can suggest, therefore, is that we go to the next summit, put down a clear marker and insist that we will refuse to accept the treaty for fiscal union.
Henry Smith: Would our position as a country not be further strengthened in the negotiations if other EU members knew that any decision would be subject to a referendum in this country? The worst time to make irreversible treaty changes is during a crisis.
Mr Cash: I could not agree more. That is why I am making the plea that we get ahead of the curve now, although it is almost too late. We should get ahead of the curve now, get things right now and make sure that the crisis that we are in is remedied in good time. We will then be able to make sure that we get things right. However, that will involve turning the current treaty arrangements into an association of nation states. It will mean abandoning the current concept of the institutions, directly in opposition to Mr Barroso’s proposals today. The crisis is very great, but our ability to grow our economy and reduce the deficit—the very raison d’être of the coalition agreement, which said that that was the way to proceed—will be totally undermined unless the proposals that I have set out are pursued with vigour now.
Mrs Brooke, I am glad to have been able to make some of the arguments, and I hope that you will listen to the rest of the debate with pleasure.
Annette Brooke (in the Chair): Order. Before we proceed, I should point out that I will call the Front-Bench spokesmen to begin the winding-up speeches at 3.40 pm. Quite a few Members are standing, so whether everyone gets in is in your hands, gentlemen.
3.18 pm
Kelvin Hopkins (Luton North) (Lab): I am grateful to have an opportunity to speak in the debate and to support the hon. Member for Stone (Mr Cash) in his concerns about fiscal union.
The issue has been raised because the eurozone is in deep trouble and is starting seriously to fall apart. A fiscal union would mean that one had substantial redistribution between the wealthy parts and the poor parts of an area. That would be acceptable in a democratic member state with a meaningful polity, but the European Union is not one. I suspect the German people would have something to say about such a proposal, if it ever went ahead. As we have seen, the German representative on the European Central Bank has already resigned because he knows that such a proposal will cause serious problems for Germany and is completely unacceptable.
I have something of track record on this issue. Thirty-two years ago, I did not think I would be speaking in such a debate. At that time, I wrote a brief for the general secretary of the union I worked for—the National and Local Government Officers Association. Economic policy was one of my areas, and I wrote a brief urging him to suggest to the TUC that we should not join the European monetary system, or the snake, which was a forerunner
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of the exchange rate mechanism and the single currency. He took my brief to the TUC, banged the table and demanded that the TUC take that line, which it did. The TUC then went along to see Denis Healey and banged the table, and he did not join the snake. I do not say it was all down to my brief, but at least I was on the same side, and we got the right answer. Unfortunately we joined the exchange rate mechanism a little later, and that was a mistake, but I could see the direction of travel then, and that it would be a disaster for both democracy and economics.
My hon. Friend the Member for Blackley and Broughton (Graham Stringer), who is no longer in his place, raised the question of democracy. It must have certain features: not just votes, but votes for people who will have power—Governments and representatives who can make decisions on voters’ behalf, and make the votes meaningful. If the vote has no meaning at all—if it is just a declaration and power is held by other people—that is not a true democracy.
Another feature of democracy is the ability to change Governments, as we have just done. The change we made was not to my taste, but nevertheless that is democracy. The way to keep the far right, and extremists of all kinds, away is to have a meaningful democracy, in which Governments can be changed, and where they have power over the lives of the people they represent. If they have no power there is no point, which is when street politics takes over. We do not want street politics. The things that happened on the extreme right and left before the second world war made for a very unpleasant time, which led to the war. We do not want that to happen again.
Mr MacShane: Does my hon. Friend take comfort from the fact that the most dramatic rise of the far right has been in Sweden, while the most dramatic and horrible single incident associated with it was the terrible slaughter in Norway? There was also the anti-Muslim referendum in Switzerland on places of worship, sponsored by the hard-right nationalist SVP. Does my hon. Friend take comfort from all those countries either being outside the European Union or not using the euro?
Kelvin Hopkins: With the far right we need to look at each individual case; I think that in Norway it was just one lunatic—an obsessive. Of course the far right attracts people who I would suggest are not entirely sane. Nevertheless, the far right in general has not taken hold in post-war Europe because we have had meaningful democracies; but I think those meaningful democracies are starting to fade. Fiscal union would, again, mean democracy taking more of a back seat.
It is clear that the founding fathers and mothers of the European Union in the 1950s wanted a world in which electors did not have the power to change Governments; they wanted power safely in the hands of a stable body. That is why the Commission was set up—to make sure that we do not have distasteful changes of politics and Government. However, changes of Government mean that people believe in democracy and work for it. They know that they will have a chance of getting their party into power next time. I shall certainly work hard next time to make sure that our
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party comes back into power; and no doubt our Conservative and Liberal Democrat colleagues will do the same. That is why democracy means something: we know it matters because those elected have power, and because it is possible to change the Government. That cannot be done with the European Union.
We are in a European crisis. The hon. Member for Stone constantly refers to Europe, but I refer to the European Union. The European Union is not Europe: they are two concepts. Europe is a wonderful continent full of fabulous people and great culture, history, music, art, languages, and literature; but the European Union is a political construct imposed on some of the countries of Europe. I fully support the idea of a different kind of European Union—a loose association of democratic member states co-operating for mutual benefit. I do not support a bureaucratic and anti-democratic machine that controls our lives and makes our votes decreasingly meaningful at national level.
The polity over which a Government govern must also be meaningful. If national boundaries are dissolved, and other structures are imposed—especially if those are not democratically controlled—that is not democracy. The great thing about democracy is that it is accepted these days that it will govern a national state. I am an internationalist, but I think that internationalism is about good relations between states, not the abolition of states, national boundaries or national entities. We get on extremely well with other states around the world because we co-operate across national boundaries, but we do not want them to disappear completely. We have culture, language and history that unite us in particular polities. That is why Germany, for example, could unite its east and west and spend a vast amount of money rebuilding East Germany. It was accepted that it was part of Germany. I doubt whether it would have spent so much money rebuilding, say, Greece—because Greece is not part of Germany but a separate country.
I think that many people would be upset if the same kind of money that went into rebuilding East Germany went into helping Greece. Greece now has the opportunity to get out of the euro, recreate the drachma and devalue. Suddenly, Greece would become the cheapest place in Europe for people to holiday, and the tourist industry would take off like nobody’s business. Greece would recover, because that is what it will be good at. It is a beautiful place, where people go on holiday. That is the logic for Greece.
The problem, of course, is that banks—and particularly French banks—have lent vast sums of money to Greece, and will be in trouble if that happens. However, as was said in a good discussion on “Newsnight” last night, either the euro will collapse and there will be a crisis with many people losing their money, or we will deconstruct the euro in a progressive and managed way, and some banks will have problems. Then Governments will have to step in and no doubt recapitalise those banks, if they choose to keep them alive. That is a difficult choice, but the logic is for countries that cannot sustain membership of the eurozone to get out, recreate their own currencies and devalue.
Ireland’s major economic partner is Britain. The British isles is not a single economy, but we are close. The fact that we are not in the euro and have depreciated our currency substantially means that the poor Irish, who are stuck in the euro, are massively over-valued relative to Britain, and so have a trading problem with
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Britain. I have suggested to Irish friends that they should recreate the punt, depreciate and rejoin the sterling zone, which is where they belong, instead of remaining in the eurozone, where they do not. I have not had any positive answer to that suggestion, but that is the logic of where we should be going.
I could speak for much longer, but others want to speak and I have probably said enough for the time being. I support the hon. Member for Stone in arguing the strong case against fiscal union.
Annette Brooke (in the Chair): After the next speech, by the hon. Member for Northampton South (Mr Binley), I would like to call the hon. Member for Witham (Priti Patel), and I know that there are others who want to speak. The winding-up speeches will begin at 3.40pm.
3.27 pm
Mr Brian Binley (Northampton South) (Con): I shall try to be brief and will therefore quickly congratulate my hon. Friend the Member for Stone (Mr Cash) on securing a debate of such importance. There is no doubt that the eurozone is contemplating its very existence, so the debate is not only timely but vital. The whole thing could blow up in our faces in the next four or five weeks, and I want to be assured by the Minister that contingency plans for that possibility are well established. I hope that he is not over-affected by what appears from the outside to be the culture of Treasury officials, who have not been over-helpful on this issue for a long time.
It is a truism that what has happened in the European Union in recent months will have profound consequences for the eurozone and a wider region, including Great Britain. It is unlikely that future efforts to provide protection for the failing currency will have any more success than those undertaken to date. The truth of the matter is that the euro is a failed currency and had within its creation the very traits for its destruction. Those are coming into view at a time when pressure is being applied.
The euro is in trouble not only for that reason, but because its membership does not understand what a properly conducted fiscal society means. I visited Greece three months ago and went to the Greek Parliament. I had to be smuggled in. I talked to a Greek politician and said, “Is tax evasion really widespread?” He said, “Of course.” I said, “Who are the people who do it?” He said, “Everybody.” I said, “Are you?” He said, “Yes.” I said, “What are you doing?” He said, “I’m buying gold.” What a story! Greek politicians are begging us to prop up their currency, yet they are getting out of it and buying gold. I hope that the Minister will take serious account of that.
We all know that Italy has deliberately—I shall use a kind word—misled people ever since the creation of the eurozone. Many would say that it lied—I would not say that in this place—about its situation. Many would say that other nations accepted Italy’s deceit, and therein lies another problem. There is no proper monitoring or policing of any fiscal measures in any eurozone country. How can we expect those nations suddenly to become as white as white on the application of a united fiscal unit? Of course it will not work, and we know it.
We face two possible measures. The eurozone could shed nations—those to the south, mainly—that cannot compete with the price of the euro, and never could, or
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the eurozone could dissolve completely, which would be very expensive for this nation. What might the Minister do to protect business if that happens?
I accept the figures given by my hon. Friend the Member for Stone, but business is worried about the impact of the eurozone dissolving. It has had a tough time for three years, and has not been overly helped by Governments of either party in this country, and it certainly does not want another great deluge of problems. Will the Minister refer to business when he responds? This country must make a decision, and it might need to do so quickly.
Mr Andrew Smith (Oxford East) (Lab): I am following the debate carefully. The hon. Gentleman refers to the possibly cataclysmic effect on this country of dismemberment of the eurozone, or of some states leaving and contingency measures being required. Might that be precisely why the Prime Minister and the Chancellor have been arguing the case for fiscal union within the eurozone, and what does he think about that?
Mr Binley: That might be. I did not say “cataclysmic”; I said there would be problems for British business. I would be grateful if, when the right hon. Gentleman puts words into my mouth, he used the words I used.
Mr Smith: It is a serious problem.
Mr Binley: The problem is serious, and I simply want to hear what the Minister has to say about it, because we expect our Government to recognise the impact on business and to do something about it. But that does not mean being involved with or part of the creation of a fiscal Europe in the eurozone. That is not the way to go, and I would rather go the other way: free up British business and restore some of the ancient and traditional markets that we have neglected for some time.
Mr Nigel Dodds (Belfast North) (DUP): I have listened to the debate from the outset. The truth of the matter is that there is no pain-free option, and that whatever happens there will be difficulties, but to continue with the old, failed approach and carry it forward to fiscal unity would be an even greater disaster than the alternative. We must inject some common sense and democracy into the argument. That is the alternative that faces the British people.
Mr Binley: I am grateful to my right hon. Friend, and that leads me to my final words.
British business is important. We must help the eurozone to come to a sensible conclusion, but that does not include our being part of a fiscal union. We must help to ensure that we renegotiate a relationship with Europe that is much more sensible than we have had for a very long time. If necessary, we must come out. We face a tough time, whatever occurs, and we must use that time in the interests of Britain, not of the eurozone, which is the creator of its own downfall.
3.34 pm
Priti Patel (Witham) (Con): I shall be brief.
I congratulate my hon. Friend the Member for Stone (Mr Cash) on securing this debate and on all that he does on all matters European and their scrutiny in the
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House. This is a timely debate, and it is essential that all necessary steps are taken to protect hard-pressed British taxpayers from paying the costs of eurozone bail-outs, full stop, and to defend Britain from efforts to enforce closer fiscal integration in the wider EU.
Having campaigned for several years against Britain’s entry into the euro, I strongly recall the arguments that monetary union in Europe would inevitably lead to fiscal union. We heard many of the arguments today. We now see Europe heading in that direction, and it is a road down which we should never be drawn. As we heard over the summer, the desire in Europe to move towards fiscal union has accelerated, and the eurozone crisis is being used to support ever-closer union and to further federalist ambitions.
The EU’s Competition Commissioner said:
“This is one moment where we need greater integration…We need fiscal union”.
As we have heard this afternoon, that is not the right way forward, and I support all the views I have heard. I appreciate that much of the talk about a fiscal union is concerned primarily with the 17 eurozone countries, but there would be dire consequences for Britain, and we have a role in the wider discussions of the implications, particularly with those countries that are trying to take the whole EU with them. We must stop that.
The Europe 2020 strategy, which my hon. Friend the Member for Stone touched on, has implications for our fiscal and economic policies, including scrutiny of national reform programmes, and for plans to increase the size of the EU budget. The European semester, for example, includes proposals for greater monitoring and peer review of our domestic budgets. Our pre-Budget report is being looked into, but it is only a matter of time before Europe tries to grasp more control of such matters, because it believes that interdependence within the EU requires tighter economic governance to apply to all member states, and not just to those in the eurozone.
I urge the Minister, politely but forcefully, to notify our European partners that any interference in our fiscal policy is unwelcome. We should not encourage that. I and many others have argued that Britain should not surrender any of its fiscal powers, but should instead use this and all opportunities presented by the prospect of any new treaty to repatriate powers to this country. That is the right way forward.
Finally, I reiterate the importance of cutting all costs relating to Europe. Over the lifetime of this Parliament, our contributions to Europe will increase by between £8 billion and £9 billion, which is unsustainable. Businesses and consumers in this country keep facing additional costs. We know the direction of travel for all matters financial in the EU. It is preventing the creation of jobs here, and action must be taken.
Hard-pressed taxpayers in my constituency and throughout Britain want cuts in the EU budget—and no more increases, not even the proposed 2% increase. We must just say no. We must defend the rebate, and if we tighten our belts at home Europe must get the message and tighten its belt. Such matters should be a priority for the Government in the months ahead and, importantly, now, while there is a eurozone crisis, but they are also an opportunity.
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3.38 pm
Mr Bernard Jenkin (Harwich and North Essex) (Con): I invite the Minister to explain why the Government are now advocating fiscal union. We opposed the euro because we did not believe that fiscal union was viable. Lord Lawson graphically explained on BBC Radio 4 this morning that fiscal union will not work because it needs budgetary union and a European Treasury, which needs a European Government and a federal Europe. There is no popular support in any European state for a federal united states of Europe, so fiscal union is unsustainable.
This is no time for positioning or appeasing; it is a time for blunt truths, and I thoroughly endorse the comments of my hon. Friend the Member for Stone (Mr Cash) that it is time for us to go to Europe and to tell our European partners positively that we have an alternative plan for Europe, which is about the orderly break-up of the euro to limit liability. The longer the issue continues, the greater the liability will be.
It is like the ERM; the officials who are today advising the Minister to support fiscal union are the same officials who advised the Conservative Government to stay in the ERM. The longer we stayed in the ERM, the more damaging it was. Why are the Government on the wrong side of history?
3.40 pm
Mr David Hanson (Delyn) (Lab): It is a pleasure to serve under your chairmanship, Mrs Brooke.
I pay tribute to the hon. Member for Stone (Mr Cash), who is nothing if not consistent in his arguments. The holding of today’s debate reminds me of the fact that I have been in the House for 19 and a half years and that the bags under my eyes started to appear when I was up all night listening to the hon. Gentleman in the debates on the Maastricht treaty in 1992 and 1993.
Mr Jenkin: Which way did you vote?
Mr Hanson: On many occasions I voted differently, because the purpose of the Opposition was to keep the Government on their toes and divided—as, indeed, we see today in the interactions between Back Benchers and the Minister.
I pay tribute to other Members who have spoken. The consistency of my hon. Friend the Member for Luton North (Kelvin Hopkins) is unparalleled, although his approach has differed from that of Labour Front Benchers. The hon. Members for Northampton South (Mr Binley) and for Witham (Priti Patel) hold strong convictions on this subject, which does not come as a surprise to hon. Members or to their constituents.
I confess that I feel like an onion in a strawberry patch, as I take a different view of the benefits of our relationship with Europe and with the European Community. I want the Government to engage positively, not within the potential framework of withdrawal—the tone that percolates through the comments of the hon. Member for Stone and his colleagues and of my hon. Friend the Member for Luton North—but in tackling deep and serious issues of economic policy, and ensuring growth, stability and fairness across the European Community.
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As I said, I feel like an onion in a strawberry patch because I hold positive views about Europe and the European Community. Our EU membership gives British companies full and direct access to 500 million consumers —the single market that Governments of all parties have supported. The 3 million jobs in the United Kingdom—10% of the work force—linked directly to the export of goods and services to the EU exist partly because of the structures of the European Community.
Our EU membership makes the UK an attractive place for investment from Europe and creates stability for the emerging countries in the east, the growing markets. Furthermore, the EU brings democracy to countries that when I was first elected were still under dictatorships and were not the positive members of Europe that they are becoming today.
Dr Julian Lewis (New Forest East) (Con): I thank the right hon. Gentleman for giving way, but this really will not do. He is making a general defence of the European Union in a debate on fiscal union, and the fact remains, as many of us have argued for many years, that there cannot be a single currency without a single economy, there cannot be a single economy without a single Government and there cannot be a single Government without a single state. That is why the Eurofederalists want fiscal union, and regardless of whether it works or fails they say we should have more union. The reality is that it is failing and we must disentangle ourselves from this mess, not have a general debate on trade in the European Union.
Mr Hanson: If the hon. Gentleman allows me, I shall cover some of those points in a moment. It is important to record the fact that we have economic growth partly because of co-operation, because of the single market, because of the widening of the European Community to the east and because of EU investment in this country.
Mr Shepherd: I am sorry that the right hon. Gentleman has repeated the old canard about 3 million jobs, but perhaps he will comment on the other side of the equation. How many jobs on the European continent depend on trade with Britain?
Mr Hanson: I believe that the single market and the European Community have contributed to growth and jobs in this country and throughout mainland Europe. The hon. Member for Stone touched on the potential difficulties with the euro and Greece, Portugal, Spain and Italy, but the argument that he advanced about renegotiation does not fly and would not be a starter in relation to the positive policies that I hope I share with the Minister on engagement and the future of Europe.
We need to look at three issues. The economic growth strategy for Europe is key to economic growth as a whole. When we look at what we are doing in reducing public spending—in achieving a balance between public spending and private expenditure—we see that the growth strategy is missing in Europe and that the collective strategy of reducing public spending will not lead to economic growth.
Given the potential collapse of the euro, it is important that we look at the current stability mechanism, and I am sure that the Minister will speak about the future stability mechanism for 2015. We must consider negotiating
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an earlier end to the temporary European financial stability facility, of which the UK is a member. The UK’s exposure is too high and is a risk, and if the euro collapsed now we would face severe difficulties with the funding mechanism.
My right hon. Friend the Member for Edinburgh South West (Mr Darling) negotiated the facility—with, I believe, all-party agreement, although there is dispute about that—before the general election, and it is key to stability with the euro. It is not in this country’s interest for Greece to fail, for the euro to break up or for other countries to default. As my right hon. Friend the Member for Oxford East (Mr Smith) said in an intervention on the hon. Member for Northampton South, one of the reasons why the Prime Minister and the Chancellor are looking to develop an EU fiscal policy to follow the current agreement is to ensure that a collapse is avoided, that the currency is strengthened and that a positive Europe, geared to growth in the future, is maintained.
Mr Binley: Will the right hon. Gentleman explain how that policy might be policed to ensure that nations properly abide by its dictates and do not act as they do in many other instances with the other regulations imposed on them?
Mr Hanson: One of the hon. Gentleman’s points that struck me most forcefully is that some countries do not play by the same rules as this country on tax evasion, tax avoidance and other issues, but that is not a reason to say that we should leave the pitch. It is our job to work responsibly within the structures of the European Community—with our Members of the European Parliament, with the European Commission and with national Parliaments—and to make the case for a single market, properly regulated, in which tax evasion and other issues are dealt with firmly.
We cannot walk off the pitch and withdraw from the European Community, although that is the ultimate aim of Members who have supported the hon. Member for Stone today. We must ensure that the replacement mechanism in 2015 is strong and stable but oriented solely on the eurozone, where the UK Government’s liabilities are limited.
Honourable, determined and consistent though the hon. Member for Stone is, and difficult though the challenges are in relation to countries, such as Greece, that should not have joined the euro in the first place, the failure of the currency and our failure to act to help to maintain stability in Europe would ultimately lead to lower growth, further unemployment and the UK being distanced from potentially successful markets.
There are many issues ahead of us about which there is clear disagreement between Labour Front Benchers and Members who have supported the hon. Member for Stone today, but I look forward to hearing the Minister’s response.
3.49 pm
The Financial Secretary to the Treasury (Mr Mark Hoban): First, I congratulate my hon. Friend the Member for Stone (Mr Cash) on securing the debate. I do not think that anything he said came as a surprise to any of us who have taken part in discussions on this issue in this Chamber, in the main Chamber or in European Standing Committees—he has the merit of consistency.
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There were helpful contributions from the hon. Member for Luton North (Kelvin Hopkins), from my hon. Friends the Members for Northampton South (Mr Binley), for Witham (Priti Patel) and for Harwich and North Essex (Mr Jenkin) and from the right hon. Member for Delyn (Mr Hanson). Let me deal with a couple of specific points that were raised. My hon. Friend the Member for Stone raised the question of a financial transactions tax. He is aware that President Sarkozy and Chancellor Merkel discussed that at their summit in August. Let me be clear about the UK Government’s view on a transactions tax. It would work only if applied globally. If it were applied any less completely than that, the transactions would simply move away. Business that was previously booked in, say, France would move to the UK, Singapore or New York.
Mr Cash: Will the Minister give way?
Mr Hoban: No. My hon. Friend—[Interruption.] May I continue? My hon. Friend spoke for nearly an hour; I have 10 minutes and want to cover a wide range of topics.
The UK would not agree to the introduction of any financial transaction tax that damaged competitiveness and growth and, in the absence of a global agreement, the UK sees no evidence that a transaction tax would maintain EU competitiveness. Of course, that does not prevent other countries from introducing a transaction tax if they wish to do so.
My hon. Friend is quite keen to ensure, given his legal background, that words are used carefully. I think that he said that my right hon. Friend the Chancellor of the Exchequer had said that there would be a new treaty. Let me give the quote, so that we do not set any hares running. The Chancellor said in Marseilles this weekend:
“I think it is on the cards that a treaty change may be proposed.”
That is a very conditional statement. It is not saying that there will be a treaty. Before we let the argument run away with itself, I point out that there is no proposal at the moment for a treaty.
My hon. Friend the Member for Northampton South asked whether the Treasury was monitoring the situation in the eurozone. Yes, it is. We are working closely with the Financial Services Authority and the Bank of England to monitor what is happening in the eurozone and to understand its potential impact on the UK economy and banking system. We take that particularly seriously because of the interconnection between financial markets and our economy.
Let me be clear: the responsibility for sorting out the problems of the euro area ultimately rests with the euro area Governments. We are not members of the euro and will not join it in the lifetime of this Parliament. Being outside the euro area has clearly given us the flexibility to adapt our fiscal and economic policy to manage the crisis. It is not our responsibility to deal with their problems.
However, no one should be under any misapprehension about the importance of the euro area to the UK economy—a point that my hon. Friend the Member for Northampton South made very powerfully. A strong euro area means a growing market for our goods and services; a weak euro area puts at risk jobs and businesses
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in our constituencies. We should not lose sight of that. A weak euro area is not in our interest: it puts jobs and businesses at risk. More than 40% of our exports go to the euro area. Hon. Members will know that we export more goods and services to Ireland than we do to Brazil, Russia, India and China combined. No one should be under any illusions about the importance of the euro area to our continued success. Britain wants a successful euro area that can deliver growth and stability, so we want the euro area to have the rules that it needs to prevent future crises.
Mr Jenkin: Will my hon. Friend give way?
Mr Hoban: No. I am sorry, but I am going to continue. As the Chancellor has said, the eurozone must accept the remorseless logic that leads from monetary union to fiscal union. That is why Conservative Members have consistently opposed joining the euro—we recognise that fundamental link. There can be a successful single currency only if there is a fiscal policy to back it up. We are seeing in the current crisis the consequences of not having that link between monetary policy and fiscal policy in the eurozone. Recognising that remorseless logic, we cannot stand in the way of closer fiscal integration in the eurozone. Clearly, our status—
Mr Jenkin: Will my hon. Friend give way?
Mr Hoban: Let me just finish the point. Clearly, our status as a euro “out” has implications for our influence over the outcome of the discussions. None the less, we should be engaged in the debate on closer fiscal integration. It is very much in our interest to have a say in the design of any new structures or processes that may be required.
Mr Jenkin: Precisely because our economic interests are so intertwined with our European partners, my hon. Friend is making the case for our having a clear position to ameliorate the crisis that is developing in relation to the euro. To light on one little piece of remorseless logic, which is that there cannot be a currency union without a fiscal union, but then abandon logic on every other part of his argument is not remorseless logic; it is putting his head in the sand. Does he actually think that a fiscal union can work?
Mr Hoban: I think that there is a great deal of work to be done on this and that it is my hon. Friend who is putting his head in the sand. We need a successful euro area if we are to protect jobs and businesses in this country. We can see some of the impact on the economy today as a consequence of the uncertainty in the eurozone. We have seen the impact in the form of growth in France and Germany being below the rate of growth in the UK in the second quarter. These issues have an immediate impact on what happens in our constituencies and businesses. We need to ensure that the eurozone is successful if we are to continue to have a successful economy.
Dr Julian Lewis: Will the Minister give way?
Mr Hoban: No, I am going to continue. [Interruption.] No, I have four minutes left and there are more things that I need to say. My hon. Friend would have had a chance to speak earlier if there had been a more even division of time.
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The situation in the euro area remains one of great concern. Market tensions have persisted since the euro area summit of 21 July. The European Central Bank’s purchase of an additional €70 billion of euro area bonds since early August has been accompanied by an alleviation of some of those tensions, but Greek 10-year bond yields are at a new high of about 20% and Italian and Spanish 10-year bond yields remain high. Commitments were made at the summit of 21 July to enhance the scope and flexibility of the European financial stability facility, to lengthen the maturity of euro area loans and to lower interest rates. Those commitments must be implemented in full. Euro area countries need to get ahead of the curve and move towards a more permanent, comprehensive solution to the ongoing crisis.
Several further proposals for greater fiscal integration in the eurozone have been put forward, most notably by President Sarkozy and Chancellor Merkel following their summit of 16 August. There will be further debate about that, but let me be clear: nothing in the agreement of 21 July or in the current proposals put forward by Chancellor Merkel and President Sarkozy requires a treaty change or a transfer of powers from the UK to the EU. That is the state of play at the moment, but it is clearly not possible to say where the debate on fiscal integration may end up.
As the Chancellor has already told the House, more radical proposals should be considered as part of a permanent solution for the euro area, including measures such as euro bonds or other forms of guarantee. However—this goes back to the point made by my hon. Friend the Member for Northampton South—any move in that direction needs to be matched by more effective economic governance in the euro area to ensure that
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fiscal responsibility is hard-wired into the system. I am pleased that he recognised the need for those monitoring controls to be in place.
Although euro bonds or other guarantees could be designed in a number of ways, it is possible that such a proposal would require a treaty change. If that were to happen, the Government would act to protect the UK’s national interest, as we did last December when leaders agreed to amend the treaty to allow the creation of the new, permanent crisis resolution mechanism. As my right hon. Friend the Prime Minister said when he appeared before the Liaison Committee last week, we will take that opportunity seriously. He said that
“when there is a treaty change, you have an opportunity to put forward what you want in your country’s national interest. I have done that once already, and I would do it again in the future.”
“Britain should think carefully about how to maximise our national interest if that”—
“were to come about, but I think that it is some way down the road.”
We need to ensure that there is a strong eurozone and, as hon. Members said, a clear growth agenda in the EU. The current position is one of the barriers to those countries digging themselves out of the recession. However, we should not underestimate the value of the European Union to this country. It adds £600 billion a year to the economy. Further liberalisation could add a further £800 billion to the value of the economy. We need to ensure that we get this right. It is in our national interest to get it right, and we will work to ensure that we do so.
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Waste Water (Thames and Greater London)
3.59 pm
Simon Hughes (Bermondsey and Old Southwark) (LD): We are moving to slightly calmer waters as we change from a debate on European Union fiscal union to one on waste water in the Thames and Greater London. I am grateful to the Minister for his and his Department’s regular interest in these matters.
On Monday this week, David Walliams—he is probably more famous than many of those elected to Parliament—ended his swim from Gloucestershire to Westminster bridge. On the same day, Boris Johnson, the Mayor of London, wrote an article in The Daily Telegraph entitled “David Walliams’s Thames swim: it will take a super-sewer to get London out of this mess”. He was referring to the fact that London has a looming waste water crisis.
We have a fantastic piece of engineering in this great city of ours. Our sewer system was designed by Sir Joseph Bazalgette in the wake of what was known as the great stink of 1858. The purpose was to stop the sewage backing up into homes and streets whenever the system overflowed. It was connected to the Thames, so that excesses of waste water and sewage emptied into the river. That system was designed for a city of 4 million people. The city’s population is now approaching 8 million, and before too long it will be a conglomeration of nearer 9 million people. It is obvious to everyone that, with the best will in the world, the present system will not be sustainable. Thames Water is responsible for the system, the company is overseen by Ofwat, and the regulator is accountable to the Department for Environment, Food and Rural Affairs.
For some years a proposal has been on the table to build a Thames tunnel. It was the subject of consideration by the previous Government, and the scheme has been handed on to the present Government. In principle, Labour Ministers gave their blessing to a tunnel scheme; the alternative was a softer environmental mix of things, including a hope that rain water could be collected, and that there would be a more personalised collection with less sewage and so on.
The amount of sewage currently discharged into the Thames is one of many dramatic figures. That is not sewage taken to the waste disposal plants but the excess of sewage that ends up in the river. It is 39 million cubic metres a year. That may not mean much to most people, engineers apart, but it is equivalent to filling the Royal Albert hall 450 times. That is a lot of sewage. It is clearly something that nobody would wish to be in our capital city’s river.
Last weekend, I had the privilege of chairing the hugely successful Thames festival for the 10th time. The Mayor of London’s Thames festival is a reincarnation of the GLC festival, which started 15 years ago. It is held to celebrate the river, and getting on for 1 million people were there this weekend. We want the river to continue to be celebrated. We want it to be clean. We want it to be accessible, and we want people to be able to use its beaches. We want it to be used for commerce and tourism and related activities. We want to see more natural life in the river, including fish such as porpoises and dolphins. We also want to see David Walliams or the Mayor of London swimming in it—or even the hon.
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Member for Poplar and Limehouse (Jim Fitzpatrick), whose constituency is opposite mine on the north bank of the river, and me. I was once thrown in; it was not a pleasant experience, but that was soon after I was first elected 28 years ago.
I bring the matter to the House today because, in part, it is already on the Minister’s desk. Indeed, the Minister will be aware that in November last year, perfectly properly, the Government published the national policy statement for waste water. On 30 March 2011, the Select Committee on Environment, Food and Rural Affairs published its report. It makes 19 recommendations. In essence, the Committee would like to see the draft national policy statement amended. As the Minister knows, some of the Committee’s recommendations relate specifically to Thames matters. I shall put recommendations 9 and 14 on the record, but I shall leave colleagues and others to read the other conclusions later.
“Approval of the costs which can be passed on to water and sewerage company customers is rightfully a core Ofwat function under its current regulatory remit and it is hard to see the benefits to be gained from duplicating this activity within the spatial planning process. In view of the alarming increases in estimated costs, Ofwat must fully utilise its regulatory powers to scrutinise the economic case for the Thames Tunnel project and be rigorous in determining which costs should be passed on to Thames Water’s customers.”
Amen to that. Water bills are high enough and the project will not be cheap, so people will want to ensure the best cost benefit.
“We recommend that the draft NPS be revised to produce a purely generic document by removing Chapters 3 and 4 on the replacement of the Deephams Sewage Treatment Works and the Thames Tunnel. Defra may wish to provide material in an annex exemplifying points made in the NPS by reference to specific schemes, but it should be made clear that it does not constitute information to which decision makers must have regard when considering project applications.”
Those are the only two Thames-specific recommendations. The others are about the process.
I shall briefly put things into context and then pose my questions. I apologise that I gave the Minister notice of my questions only recently, but they are all matters for his Department. However, I shall understand if he needs to come back on some matters. The European Union agreed in 1991 that there should be one system across Europe. Again, following the previous debate, one of the good things that has come out of the EU is that it is setting standards on such things as air and water quality. Bluntly, London has failed on both water and air. On water, the UK is on the way to being taken to court by the Commission. We are also at risk of being liable for poor air quality in London. The EU is the right place to chase such things and to ensure better quality. The Thames tunnel project was intended to ensure that we comply with statutory EU requirements. However, we have been held to be in breach of the directive, which is why the matter is going to the European Court of Justice. Judgment is expected next year.
Secondly, the Government have been consulting on secondary legislation to be made under the Planning Act 2008 that would classify proposed major sewer projects such as the Thames tunnel as nationally significant infrastructure projects. The consultation closes on 5 October. The project would go to the independent Infrastructure
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Planning Commission. My colleagues and I and Conservative Members did not want that body to be independent, but when the Localism Bill becomes law it will become accountable to the Government, and the Secretary of State will be accountable to Parliament, which I welcome.
The last bit of the jigsaw is that Ministers are considering the draft national policy statement in light of the consultation responses generally, and the Select Committee’s responses in particular. We will have a final statement before too long. A waste water policy statement is coming down the track, and there will be changes to the planning law. There is also Thames Water’s plan; the company has received responses to its consultation and it will almost certainly published a revised plan in November.
Like every riverside MP, but more than most, my constituency is very much on Thames Water’s map. When the company announced its plans at the turn of the year, it featured two sites in Bermondsey. It considered Druid street, which would connect the local combined sewer overflow, known as Shad Thames pumping station, to the main tunnel. It also considered the foreshore near Butler’s wharf and the car park at the flats in Tower Bridge road. It decided that Druid street was the preferred site. However, there was concern about that as it was the site of a children’s playground on a council estate and not the greatest of sites. I hope that Thames Water will respond positively to those views and go ahead using the Shad Thames pumping station and not the Druid street site.
By far the most controversial plan is to use the King’s Stairs gardens as the main drilling site for south London. Some 5,274 people have signed a petition against it, and a considerable number of other people, including me, have said that it is not a good plan because it is a greenfield site and on the Thames Path.
Thames Water has responded positively to such views. It has always engaged well with the community. I pay tribute to the Save the King’s Stairs Gardens action group and to its chair Donna Spedding. The group made a substantive case about the use of greenfield sites as opposed to brownfield sites and put forward good technical arguments.
As a result, Thames Water has now co-purchased Chambers wharf, a brownfield site slightly further upstream. As of this moment, there are two sites in the frame. Obviously, the Rotherhithe community hopes that the King’s Stairs gardens site will come off the list as it is inappropriate. We do not know where the other sites will now be—whether it is in Southwark, Deptford or further downstream.
Mr Andy Slaughter (Hammersmith) (Lab):
The hon. Gentleman correctly identified two problems with the scheme. One is the choice of site and the other, as with all infrastructure projects, is the cost. As constituency Members, we will all have issues and will have to negotiate with Thames Water. Like the hon. Gentleman, I have found Thames Water to be a reasonable organisation with which to negotiate. Can we try to disaggregate this matter from the project as a whole? My local authority, which is implacably opposed to the scheme, is using those legitimate objections to object to the whole scheme. I hope that we can have a three-party endorsement today of the fact that we have to clear up the Thames.
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David Walliams has focused our attention on that. Every single week, my constituents see huge amounts of raw sewage going into the Thames, near to where they live. Let us try to identify and solve the problems so that we can support a scheme that really has to be carried through.
Simon Hughes: The current estimate for the Thames tunnel scheme is pretty enormous. It is £3.6 billion and is likely to go up rather than down. Thames Water says that the alternative would cost £13 billion and take 30 years. When I responded to the consultation, I said that the evidence seemed to be in favour of the Thames Water plan, subject to getting the sites right, but I wanted final reassurance. I made my response formally at the turn of the year.
I also put in a short response to the private commission that was set up by some interested local authorities and chaired by Lord Selborne. The commission has argued that we must have a totally different direction. I am not persuaded by that. The Thames tunnel is the best direction. The previous Government came to that view and the present Government have held to it. Unless something comes up in the latest process, we need to go ahead with the Thames tunnel scheme, but the site must be right. My experience is that engineers are reasonable people who will look at a better option if it is put to them. They are also quite flexible. The private commission is having its hearings and it is about to produce its report. I hope, therefore, that we can arrive at a common position.
My questions to the Minister are partly procedural as well as substantive. Will the Government respond specifically to all the recommendations in the Select Committee report? If they cannot do it now, when will they do it? If the concerns that have been expressed by colleagues across the House and in the Select Committee are taken into account, will the Minister accept that that will lead to a change in the draft policy statement?
Will the Department delay bringing the debate on the policy to the House until the Localism Bill has been enacted and implemented and the Infrastructure Planning Commission has been set up? I want to ensure that if the Thames tunnel is subject to an overarching planning approval, the decision is a democratically accountable one. Will the Minister give us the earliest date when Parliament might be able to have the national policy statement back? When the policy comes back, can he assure us that there will be a debate on the Floor of each House so that colleagues in London and the whole of the Thames estuary can make a contribution to the debate? This is a big debate and we want to ensure that it is given adequate time and that it is not something that is pushed through on the nod or in half an hour.
It is clearly logical to have one overarching planning approval for the scheme, but if there are any sites on which there is a significant building there should be extra planning processes to ensure that everything is done in the right way. For example, if the King’s Stairs gardens site or the wharf site in Bermondsey are chosen, people will want to know that the new building will not be too tall, too big, too wide or too ugly and they will also want to have their say. The subsidiary buildings should not be rubber-stamped through either. Will the Minister pass on that concern to his colleagues in the Department for Communities and Local Government?
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We want an extra consultation process about the detail or extra planning requirement.
Whatever our views about the Selborne commission, will the Minister tell us that the Department will consider the report and respond to it before the final draft of the national policy statement is published? Will he give us the Government’s final assessment of the cost of the project and will he give us an assurance that council tax payers, local councils and the Government will not have to pick up the tab? Obviously, people understand that this is a Thames Water project and that it will not be cheap. People will want to know not just what the cost is overall but that their bills will not go up in other places as well. It would be helpful if the Minister could show us the departmental cost-benefit analysis.
Will the Minister tell us whether there is any compensation available to people whose land, properties or amenities are affected? If they suddenly have a great treatment works or a shaft put in front of their window for seven years, what compensation will they receive? If Thames Water identifies new sites, people in my constituency and elsewhere would be grateful if the sites that are no longer in the firing line or are no longer being considered are dropped off the list so that they know they are no longer under threat.
I end by paying tribute not just to the Save the King’s Stairs Gardens group but the Save Your Riverside group. All these people are highly intelligent and reasonable in what they are asking for and I hope that I have reflected that here. This is a huge issue for many of our constituencies in London and we would be grateful for as much information about the scheme as the Minister can share with us.
4.19 pm
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon): Thank you, Mrs Brooke, for calling me to speak. I am very grateful to you for your chairmanship of our proceedings this afternoon. I congratulate my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) on raising this important issue at a crucial time for this project.
I do not know any elected person from any political party who could possibly approach this project in any way that was not sceptical. We are talking about a huge sum of money, but we are also talking about a huge problem. Consequently, it is right that we rigorously check, first, that undertaking this project is the right thing to do and, secondly, that the alternatives are simply not good enough to deal with what we know is a very serious problem.
I approach this project from that perspective, and I also approach it as a constituency MP, whose constituents are paying Thames Water’s bills in the most westerly point of the Thames Water area. As is the case with many MPs in the Thames Water area, my constituents will ask me whether this project is good value for money and what it aims to achieve. I understand the concerns that have been expressed, and I respect the debate and the spirit in which the right hon. Gentleman introduced it.
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We know that we face a very serious problem. It is not only a legal problem, although it is important that we respond to the European Commission’s concerns and its belief that we are not complying with the urban waste water treatment directive—we will vigorously defend ourselves against that claim. Nobody who has anything to do with the River Thames can deny that we face a problem now and that if our generation of politicians does not take action, we will leave the next generation with a possibly devastating impact on an iconic—that is a rather overused word, but it is appropriate here—river that runs through one of the most important capital cities in the world.
Therefore, the Government are taking a similar view to that of the previous Government, in that we believe that it is important that this project goes ahead and that the tunnel option is the right one. We are open about our reasons for that. I have the highest respect for Lord Selborne. He is an extraordinarily able parliamentarian and he has experience of a wide range of scientific and environmental issues. My Department is taking his commission and its inquiry seriously. We have contributed to that process, and we will certainly look at what his commission says. We want to be as open as possible, and we also want to try to make people who are sceptical about our proposal understand how we have arrived at this point, sharing with them as much information as we can.
It takes as little as 2 mm of sudden rainfall to trigger an overflow into the Thames of untreated waste water from a combined sewer. Currently, around 39 million cubic metres of waste water enter the Thames every year from London’s combined sewer overflows when storm water capacity is exceeded. That is enough to fill the Royal Albert hall 450 times. I have tried to get that image out of my head, but failed.
Those discharges occur around 50 to 60 times a year, and they have a significant environmental impact on the Thames. The drought ended in June. That was just after the Department for Environment, Food and Rural called the drought summit—the two events may have been linked—and at that time there was a combined sewage overflow spill that resulted in an appallingly large number of fish being killed. It is the habitat and environment of the river that we are concerned about. I am sure that hon. Members from all parties know that those discharges increase the likelihood of aquatic wildlife being killed and create a higher health hazard than we can imagine for people using, enjoying or living near the river. Therefore we must take action. Nobody has more respect than me for David Walliams for his extraordinary achievement, but it brought to our attention the fact that he had to take antibiotics to protect himself in case he fell ill because of the condition of the Thames, as so many other people already have.
In the few minutes that I have left, I will try to respond as quickly as I can to the specific points that my right hon. Friend made. I received a copy of them as I walked into Westminster Hall this afternoon, because I came straight from another event.
My right hon. Friend asked what the Government’s response is to the recommendations of the Environment, Food and Rural Affairs Committee report of 30 March. I can assure him that we will respond to that report in full in a few weeks’ time, and I will ensure that he is apprised of that response.
My right hon. Friend also asked whether my Department will hold off on the publication of the revised national
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policy statement until the relevant part of the Localism Bill has been implemented. We are going through this process without prejudging what Parliament will do, on the basis that the Localism Bill as it currently stands will receive Royal Assent. It is really important that we understand that the Localism Bill will bring that crucial element of democratic accountability, and I am grateful to him for raising that point.
Parliament will consider the NPS by the end of this year. My right hon. Friend asked me whether I can confirm that there will be a debate about the NPS on the Floor of the House and, if so, whether the motion will be amendable. The NPS will be laid before Parliament for 21 days, and it is in his gift and that of any other right hon. or hon. Member to request a debate on it. I would welcome such a debate, which would be an opportunity to set out our reasons for supporting this project.
My right hon. Friend asked whether significant consequential buildings will be the subject of local planning processes. I think that he is concerned about the NPS and the planning processes being dealt with all in one when there might be specific issues in right hon. and hon. Members’ constituencies about legitimate local planning concerns. My understanding is that those cases would undergo application for development consent. I will write to him and make it absolutely clear what we are saying here, because I know that this is a matter of particular importance to right hon. and hon. Members.
Jim Fitzpatrick (Poplar and Limehouse) (Lab): Will the Minister be so kind as to include in that correspondence the other hon. Members who are here in Westminster Hall for this debate and who are interested in that particular issue?
Richard Benyon: I put it on the record that I will copy that correspondence to the hon. Members for Poplar and Limehouse (Jim Fitzpatrick) and for Hammersmith (Mr Slaughter), who are present in Westminster Hall for this debate.
The Thames tunnel commission has been established. As I have already said, we are providing evidence to it and we will look at what it produces. My right hon. Friend the Member for Bermondsey and Old Southwark asked about the cost of the Thames tunnel project. Obviously, that is of huge concern to everybody who pays water bills in the Thames Water area. The current
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estimates for the costs are being reviewed on a regular basis, as he would expect them to be. As is the case with any cost assessment, there are assumptions in those assessments, including assumptions about construction costs and the financing of the operation. I assure him that Thames Water is building a very large contingency element into its costs analysis. Along with Thames Water, we are being extremely rigorous in ensuring that all risks are being considered and that—without being Rumsfeldian—all the unknowns that we know about are assessed, to see whether we can know more than we currently do.
The most important point, however, is that there must be a credible package to put, first, to water-charge payers and, secondly, to put to investors. Without that credible package and without Government support for the project, I do not believe that we can go ahead with the scheme. As I have said, it is extremely important that there is a credible package. An impact assessment from 2007 of cost-benefit analysis is being updated, and we will make the updated version public.
My right hon. Friend asked what the rules are regarding compensation when people’s land and amenities are affected by this scheme. If he will allow me, I will include a fuller answer to that in my letter to him.
My right hon. Friend’s last question related to issues about the sites at King’s Stairs gardens and Chamber’s wharf. That is a very important question and there are other sites that other hon. Members have already raised with me and will continue to do so. I confirm to my right hon. Friend that those issues are planning issues and therefore that it is for Thames Water to take them forward. However, we are looking very closely at them and we will liaise with him and others if we feel that there is a role for Government to influence the process. We want to ensure that this enormous scheme—both its construction and its eventual operation—has as little impact as possible on his constituents and others in the Thames area.
I cannot give a fuller reply than that, but I assure my right hon. Friend that I will continue to liaise with him and other London Members, particularly riverside Members, as well as with any other hon. Members who represent constituencies in the Thames Water area, to ensure that we are working together, first, to make the value of this project understood and, secondly, to make it a success for future generations.
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Consumer Focus Wales
4.30 pm
Mr Mark Williams (Ceredigion) (LD): It is a particular pleasure to serve under your chairmanship this afternoon, Mrs Brooke. I am grateful for the opportunity to once again put forward the concerns of the Welsh consumer sector to the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Kingston and Surbiton (Mr Davey). He was good enough to meet representatives from Consumer Focus Wales and my hon. Friend the Member for Brecon and Radnorshire (Roger Williams) a few weeks ago. I was grateful for that meeting, and I am grateful to have the opportunity to present to him what are perhaps some familiar arguments.
Consumer Focus was set up by the Consumers, Estate Agents and Redress Act 2007 and it has a federal structure, with autonomous bodies in each of the devolved nations. The bodies collaborate, but each leads on projects of its own, particularly where there are differences due to devolution. Consumer Focus Wales has done some outstanding work on a number of issues of concern to my constituents. It has worked very closely with trading standards departments on the major concern of private car parking, including with Lawrence Martin from Ceredigion trading standards, to try to eradicate the shady practices that sadly have gone on in the pursuit of private parking offences. I understand that one private operator in Ceredigion has been the cause of the most trade complaints in the area for many years. A year ago, Consumer Focus Wales put out a call for evidence to consumers and received numerous complaints about private car park operators. The complaints included instances of operators misleading consumers about the nature of charges, operators and debt recovery agents using threats to secure payment, charges that bear no relation to the loss sustained by the operator or landowner, ease of access to keeper details registered with the Driver and Vehicle Licensing Agency, errors in charging and the lack of an independent appeals process. I also, as a constituency MP, have received a number of complaints, and there has been interest in the local press. I cite that as just one pertinent example in my constituency.
Consumer Focus Wales has carried out crucial research as part of its work, thanks to which we know that 200,000 people in Wales do not have access to a bank account, 206,000 homes in Wales are off the mains gas network and half of prepayment meter households self-ration their energy. That research has given us additional insight into the problems faced in Welsh communities, particularly rural ones. I am very glad that my hon. Friend the Member for Cardiff North (Jonathan Evans) is here this afternoon. We do not know whether the new model will allow for such unique Welsh research to be carried out to the same extent, advancing Welsh issues in a Welsh context.
The work that Consumer Focus has done on post offices, digital inclusion, fuel poverty and financial services has been very important in raising the issues and in proposing practical solutions to some of the concerns. A major piece of work for Consumer Focus Wales this year has been an investigation into park homes, which is an issue close to many of my constituents’ hearts. Many of the issues involved, particularly licensing by local
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authorities and planning, are devolved, so that is an excellent demonstration of why we need a Welsh perspective.
Perhaps the most important work that the organisation has done—literally a matter of life and death—has been its investigation into E. coli and food safety. All members of the Public Bodies Bill Committee have received as written evidence a letter from Sharon Mills, who tragically lost her son as a result of the 2005 E. coli outbreak. Consumer Focus Wales has taken up the matter, raising some serious concerns about food safety, and changes have been implemented as a result, such as the Welsh Government agreeing to introduce the mandatory display of food hygiene ratings by all food businesses, and encouraging the Food Standards Agency to clarify the law on the separation of raw and cooked food. Just this month a food safety map of Welsh schools was released, which highlighted the ones that had failed to make the grade. For the record, it is worth quoting a paragraph from Mrs Mills’s letter:
“If it wasn’t for Consumer Focus Wales the profile of food safety would not have been raised over the past two years, significant advancements in implementing these recommendations wouldn’t have been made or reported and most importantly myself and other families would continue to be in the dark about what action was being taken to ensure no other family has to go through what we have been through.”
Jonathan Evans (Cardiff North) (Con): As a former consumer affairs Minister, I acknowledge the difficulty that there was during my time in office in getting a coherent and relevant representation of consumer viewpoints, which was a key Government objective. It is universally recognised that Consumer Focus Wales has managed to achieve that objective and, therefore, within the context of the reforms that are being considered, I wonder if my hon. Friend would not think it appropriate for the responsibility for Consumer Focus Wales to be devolved to the National Assembly for Wales, so that we can at least retain within our area an organisation that is universally admired across the political spectrum.
Mr Williams: I am very grateful to my hon. Friend for making that point; he pre-empts the second half of my speech. The central message on which I agree with him is the need to secure a holistic body of information, with those isolated cases with which we as constituency MPs often deal put into the much broader context. That has been the great strength of Consumer Focus, and Consumer Focus Wales.
I wanted to set out the work that Consumer Focus Wales has done, because I do not want anyone to be under the illusion that it is not a relevant or useful body. I certainly do not believe that the Government take the view that the work done by Consumer Focus is not valuable; the Minister has said that that is not the case in our discussions. The organisation’s work is recognised, because the Government propose to transfer its functions into another, albeit in my view inadequate, model. The Government’s intention to reduce the cost is understandable, and I sincerely hope that they are able to deliver a service for consumers at a lower cost, but these functions are vital—they make a real difference to people’s lives.
The Government are now consulting on their approach to consumers, while the legislation that will allow them to abolish Consumer Focus makes its way through the Commons—the hon. Member for Clwyd South (Susan Elan Jones), who is here, will recollect yesterday’s brief
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discussion in the Public Bodies Bill Committee on the role of Consumer Focus. The consultation had not, however, even been launched when the Bill was heard in the House of Lords some months ago. That certainly is not the ideal approach, though it is arguably necessitated by the difficult timetable and the need to make savings. Nevertheless, it inevitably has created a sense of uncertainty.
The real concern that Consumer Focus Wales has is about the model proposed by the Government. There are few organisations that I have praised more often in this House than Citizens Advice. It performs excellent advocacy right across Wales and the United Kingdom, but it does not have—currently, at least—a great deal of expertise in detailed policy research, certainly outside of benefits, personal finance and housing. It has done some admirable work, and as a constituency MP I have referred cases to it on such matters, and it has referred cases back to me. What were formerly my two bureaux in Aberystwyth and Cardigan, now merged into one Ceredigion bureau, have done some excellent work.
Roger Williams (Brecon and Radnorshire) (LD): I support my hon. Friend in his views on Consumer Focus Wales, but I do not think that the alternative model would work to represent my constituents. Citizens Advice does not have that reach into the rural areas or that way of tapping into the problems. For instance, in Brecon an alternative organisation called the Brecon Advice Centre has set itself up to replace the citizens advice bureau.
Mr Williams: I agree with the thrust of my hon. Friend’s remarks. Like me, he represents a vast rural area. Brecon, Radnorshire and Ceredigion are huge tracts of rural Wales. With the capacity of small organisations, inevitably facing financial constraints at the moment and curtailed by costs, I question their ability to reach out into those communities, despite the best of intentions. We will have to look closely at the resource transfer implications, if resources are going to Citizens Advice, to ensure that it has adequate resources to deliver what is expected of them.
I welcome the Government’s intention to expand Citizens Advice’s policy research team, but there is no certainty about retaining existing expertise to transfer it to that team. We need to differentiate between the advocacy role of the individual bureaux in our constituencies and the central role of collating information, to which my hon. Friend the Member for Cardiff North alluded, providing Members of Parliament, other interested parties and the Government with holistic information that advances public policy.
Some excellent people work in Consumer Focus Wales, and they have developed a high level of expertise over the past years. There is no guarantee that those excellent people will be retained by a new model. I hope that I am wrong on that, if we move in a certain direction, but I fear the worst.
Susan Elan Jones (Clwyd South) (Lab): Does the hon. Gentleman agree that Consumer Focus Wales offers a unique service? It is not there as a special interest group, but there to protect the citizen as a consumer. That is where its research comes from, and that is its focus. It is able to support consumers right across Wales with its specialist knowledge because of that.
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Mr Williams: I concur with the hon. Lady’s comments. Consumer Focus Wales has the unique ability to look at an individual case or an individual citizen coming forward with a concern, call for further information, as I said when I mentioned car park issues in my constituency, explore the depth of the problems, which are often brought to its attention by an individual citizen, and present them positively to policy makers. That approach is to be commended. The matter is not just about advocacy, but about the link between an individual citizen’s problems and advancing changes in public policy.
Returning to the body of expertise, I would be interested if the Minister could update us on the latest status of discussions with Citizens Advice about the proposed model.
The definition of “consumer” set out in part 1 of the Consumer, Estate Agents and Redress Act 2007 includes the words,
“the activities of any government department, local or public authority or other public body.”
As such, Consumer Focus Wales regularly undertakes work to look at the services that consumers receive from all levels of Government. It does not just have an advocacy role—critical though that is for individual citizens—but looks at the workings of Government agencies. There is no certainty that that important and independent focus on Welsh public services will continue.
Nia Griffith (Llanelli) (Lab): Is the hon. Gentleman aware that Consumer Focus has also identified the need to help shape the functions of the new Welsh language commissioner? That is yet another area in which its expertise could be used.
Mr Williams: I was not aware of that, and I am grateful for that intervention. I will come on to issues about the Welsh language in a moment, because they are, as the hon. Lady knows, critical to our constituents.
The failure to recognise the gap between what the consultation describes as consumer policy and all the areas that Consumer Focus Wales works in creates a worry that future arrangements may leave out altogether significant areas of work currently undertaken by Consumer Focus Wales. There is also concern about the arrangements for the extra help unit, which protects some of the most vulnerable consumers in society and is part of the Consumer Direct service via a referral protocol. The proposal is for that service to be transferred to Citizens Advice and Citizens Advice Scotland by March 2012. Therefore, that needs to be integrated into the plans for Citizens Advice to take over the Consumer Direct service, with absolutely no break in the service provided.
Significantly, the extra help unit is a completely bilingual service. That has to continue. I am not clear from what has been proposed how Citizens Advice plans to supply a fully bilingual service. Not only does that have to be provided, it must enable Welsh speakers to have direct access to a phone line staffed by trained Welsh language operators. Many of us, including myself, have great concerns about the function of public bodies and their capacity to respond to people who speak in Welsh. Providing a service via an intermediary translation service such as Language Line is not an acceptable alternative, a principle supported by the Welsh Language Board. The Office of Fair Trading once tried to provide a
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Welsh language Consumer Direct service via an intermediary, but changed that policy following complaints from users and advice from the Welsh Language Board. Any clarification on that matter would be extremely helpful.
Crucially, while the new model in Scotland will be led from Scotland, and the model in Northern Ireland is led from Northern Ireland, in Wales we will be led from London. That would present concern in many areas. Given that the Welsh Government have competence for a number of the issues raised by Consumer Focus, and that there are many significant policy divergences between London and Cardiff, many of which I welcome, it is crucial for there to be Welsh input, which was the point made by my hon. Friend the Member for Cardiff North in his intervention. I know that we have a much better model for Wales than when proposals were first raised, but it still falls short of the Consumer Focus Wales model. I doubt whether it is practically achievable within the current model of Citizens Advice in England and Wales.
I understand that the Welsh Government are seeking the power to set up their own consumer body, in the same way that the Public Bodies Bill will give them the power to set up their own environmental body to take on the functions of the Countryside Council for Wales, Environment Agency Wales and Forestry Commission Wales. That would not involve the transfer of new powers, other than the ability to set up their own body to deal with advocacy. It would require no additional funding—in the current climate I respect that—as Wales would simply get the Barnett consequential that would arise from the new model in England, with much of the funding coming from levies rather than the public purse. The Minister may well urge me to respond to the consultation, but the difficulty that we face is that the Bill is going through Parliament now, and if we are going to give the power to the Welsh Government, as I believe we should, we have to act now.
Finally, we should go back to the original purpose of the decisions over quangos and consumer bodies. Do they streamline the process? That is questionable, given the new responsibilities expected of Citizens Advice and the significant work that will be required to get it to do the equivalent work of Consumer Focus Wales. Will it save money? Again, that is debatable, given the costs of transferring functions and the expansion of Citizens Advice that is required. I am sure that the Minister can help us on that matter.
Ultimately, there is a need for a body that can look specifically at all consumer issues from a Welsh angle. If that can be achieved through what the Government are outlining, then I am happy to listen to what they propose, but I am not sure that it can. In that case, I hope that the Minister will listen to the calls of many, including his counterparts in the Welsh Assembly Government, and give them the opportunity to go their own way and have the power to set up a Welsh consumer body—
Jonathan Edwards (Carmarthen East and Dinefwr) (PC): Will the hon. Gentleman give way?
Mr Williams: Before the last four words of my speech, I will give way.
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Jonathan Edwards: I apologise for being late; I was giving evidence to the Select Committee on Procedure. There is unanimity of support in the National Assembly for Wales for the transfer of such powers. That is a key point to be made to the Government in London.
Mr Williams: I am grateful to the hon. Gentleman for making that intervention before my last four words. That is a key point. On the basis of what the hon. Gentleman and I have said, I hope that the Minister will look favourably at what some of us are suggesting.
4.49 pm
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey): May I start by thanking my hon. Friend the Member for Ceredigion (Mr Williams) for securing the debate? As he said, he and my hon. Friend the Member for Brecon and Radnorshire (Roger Williams) came to see me in June, just after the consultation had begun, to press their case. My hon. Friend the Member for Ceredigion has pressed his case again today with his usual energy and enthusiasm. He was right to discuss in his initial remarks the excellent work done by Consumer Focus Wales. Any changes made will not reflect on that work; in many ways, we want to build on it and its excellence in representing consumers in Wales.
My hon. Friend mentioned Sharon Mills, whose son Mason tragically died during an E. coli outbreak in Wales. Ms Mills showed through her excellent work on food safety with Consumer Focus Wales that citizens can play a role. It also shows that Consumer Focus Wales has done an excellent job.
My hon. Friend is right that we are still consulting, and the consultation will not close until the 27th of this month. To reassure him and other Members, particularly Members from Wales, that we are listening, I can tell him that officials from my Department will be in Cardiff next week talking to officials in the Welsh Government about what they want. We have a genuine desire to reach out, listen, consult and find a way forward, and to ensure that all the great things that Consumer Focus Wales has done are maintained and that the Welsh voice is heard in whatever we end up with as a result of the consultation.
We must await the end of the consultation process. We will consider all responses carefully, but we believe that our proposals to rationalise further the functions of consumer protection bodies, strengthening the front line of consumer protection while reducing the complexity, confusion and waste of the current wide variety of bodies, are a positive step forward for consumer advocacy in Wales and across the UK.
We have absolutely no intention of reducing the level of support afforded to consumers across Wales; in fact, the whole purpose of the exercise is to see how we can improve it. I agree with the assertions made by the Welsh Government and Consumer Focus Wales that Consumer Focus Wales’s functions in representing Welsh consumers should be retained in Wales. The organisation’s important role in providing support for particularly vulnerable consumers, for example, which my hon. Friend asked about, will remain under the new regime.
Exactly how that role will be delivered is obviously still under consideration and will need to include comments from the ongoing consultation, but as I said, we are
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talking with interested parties, including the Welsh Government and Citizens Advice, to design a model of consumer representation in Wales that meets our objective. We believe that the concerns expressed by my hon. Friend and Consumer Focus Wales are not insurmountable, and I hope that we can cover them all in our considerations.
Jonathan Edwards: Consumer Focus Wales has an agreed funding formula with Consumer Focus. Will the Minister ensure that any successor body has funding comparable to that currently enjoyed by Consumer Focus Wales?
Mr Davey: The hon. Gentleman will understand that that is part of the deliberations and consultation. I cannot pre-judge the findings of the consultation, but funding is clearly key among our decisions.
One big issue raised is governance in Wales. We see no reason why the new model cannot replicate the current one. We understand how important it is that decisions affecting Welsh consumers should be made in Wales. I hope that that reassures hon. Members.
We do not want to add layers of bureaucracy. In these difficult times, that would be wrong, as my hon. Friend said. Although it is important that each country should have national representation on issues of specific interest to it, universal industries should also continue to have a single national voice and should not have to negotiate three or four times whenever they wish to do something.
For example, if Royal Mail wished to make even a minor change to their service, devolvement of consumer advocacy, which some have proposed, would require them to have detailed conversations three or four times over, which could lead to differing levels of service. I hope that hon. Members can understand that some industries covering the whole United Kingdom are not devolved, and that we do not want to add unnecessary costs that will not serve the consumer.
Mr Mark Williams: I am pleased to hear that the discussions are being held between the Minister’s Department and our colleagues in the National Assembly Government. That is important, and I wish those discussions well. Can my hon. Friend understand the frustration of some of us who are committed devolutionists and who look forward to the time when power can be transferred and Ministers in Cardiff, rather than here, will decide the appropriate future structure? That is my fundamental point, coupled equally with the need to provide a good service.
Mr Davey: I understand how my hon. Friend feels about that point. I hope that we can come to some agreement, not just in this debate but in due course. We want to give consumers and others greater clarity about who is championing their rights. Consumers need to know who their advocate is. We want to increase the impact of publicly funded consumer advocacy domestically and internationally and to reduce overlap. We want all that to be delivered by a known and trusted organisation with high visibility and outreach. I will talk tomorrow to the Welsh Minister, Carl Sargent, about the issue. I hope that that indicates to colleagues that we are taking Welsh concerns seriously.
Citizens Advice in England, Wales, Scotland and Northern Ireland is widely recognised and trusted by the public. In the surveys, its brand recognition is
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extremely strong and it is extremely well trusted. That is one reason why we have shaped the consultation as we have. It is a distinct advantage for an organisation with such strong recognition and trust to be up front, championing the consumer.
Jonathan Evans: I will be brief, as I am looking at the time. As the Minister is praising Citizens Advice, in which we all join him, I will share with him the observation that Citizens Advice is under great pressure. Other Members of Parliament and I are now seeing people who cannot get into Citizens Advice surgeries. Is he taking account of Citizens Advice’s capacity to take on the responsibility?
Mr Davey: I am glad that the hon. Gentleman made that point, as it enables me to clarify something that has been slightly confused in this debate. One must remember that at the moment, Citizens Advice has a national organisation, which undertakes much of its research for consumers, and local bureaux. We are talking about the national organisation, Citizens Advice, taking forward the work of Consumer Focus and other organisations to ensure a powerful research and expertise base for advocacy, education and information at the national level.
Jonathan Edwards: Will the Minister give way?
Mr Davey: I must end my remarks, I am afraid.
That will be in no way affected by local pressures. Most funding for the national work comes either from levies or from the taxpayer; a lot of the local funding comes from local government. They are two connected organisations, and the strength is in their connection.
Citizens Advice, the national organisation, gets information fed up from the grassroots all the time. That is one reason why the brand is so trusted and why the organisation has a special, and perhaps unique, role to play in our country. Citizens Advice has local representation through its bureaux in communities. Although those bureaux will not be conducting research, they will be able to feed into the analysis. That is particularly important for the most vulnerable in our society. It is another reason why I think that our model has a lot of strengths.
I emphasise that Citizens Advice has an excellent track record of advocacy on behalf of consumers at a national and local level. We want to build on that track record and the brand awareness that it enjoys and direct resources for consumer education, information, policy and advice to Citizens Advice. We also want to bring together local, bottom-up information with the national research and expertise currently carried out by Consumer Focus, which is, as we have heard, of extremely high quality. That will create a powerful consumer body to which businesses will have to listen.
We do not intend to lose the experience and expertise held at Consumer Focus. Instead, we want to bring together its policy and research expertise, especially in the energy and postal services sectors, with the long-standing success of Citizens Advice and its bureaux in helping consumers. By operating in that way, we can connect consumer policy and research functions with the concerns and problems of citizens in their communities. There are benefits to be realised by making that connection.
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We remain committed to working with all, including those across Wales, to make it a reality.
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